People's Bank of China Keeps 'De Facto Benchmark Rate' LPR Unchanged... Cautious Approach

China's central bank, the People's Bank of China, announced on the 20th that it will keep the loan prime rate (LPR), which is effectively the benchmark interest rate, unchanged at 3.45% for the 1-year term and 3.95% for the 5-year term. This aligns with market experts' expectations.

The LPR is calculated by aggregating the loan rates offered to the best customers by 18 designated banks. Local financial institutions use this as a reference for lending, making it the de facto benchmark interest rate in China. The 1-year rate affects general loans, while the 5-year rate influences mortgage loans.

[Image source=Yonhap News]

The 5-year LPR has remained unchanged for four consecutive months since March, and the 1-year LPR has stayed the same for ten months since last September. The People's Bank of China had previously signaled the LPR freeze by maintaining the medium-term lending facility (MLF) rate on the 17th.

Pan Gongsheng, Governor of the People's Bank of China, stated at the Lu Jia Zui Forum the day before, "We will continue to reform and improve the LPR," adding, "We will focus on making the loan market interest rates more realistic."

This content was produced with the assistance of AI translation services.